Buy To Let Mortgage Deposits

How much deposit do you need for a buy to let mortgage?

How much deposit do you need for a buy to let mortgage?

The amount you can borrow on a Buy to Let mortgage is based on the monthly rent.

Most buy to let lenders will require you to put down 25% as a minimum deposit. This is 25% of the property purchase price or valuation. Some lenders may require a deposit as large as 40%.

It is possible to get a buy to let mortgage with a deposit of just 15%. However, the interest rates are higher and there’s fewer lenders and mortgage deals to choose from.

With a 25% deposit you will have a decent choice of lenders and mortgage deals for your investment property.

For a buy to let remortgage this means you need equity of 25-40% of the property value.

So how much could you borrow?

The amount you can borrow with a buy to let mortgage is very different to a standard residential mortgage. While the lenders are interested in your own earnings, they are much more interested in the earnings (ie the rent) that your property can generate.

As with any other mortgage, your deposit will affect how much you can borrow, as this will affect the loan to value %.

If you want to borrow £150,000 against a buy to let property valued at £200,000, this equates to a LTV of 75%.

In addition to the LTV ratio, most lenders will also set a minimum ‘rental cover calculation’ which is generally set at 125% (or 145%) of the monthly mortgage interest payments.

So for a mortgage repayment of £1000 you will need to demonstrate rental income of at least £1250 per month.

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I wanted to express my sincere gratitude to you and the team at Drake for the exceptional service and attention to detail in helping secure mortgages for both of my children in the last three months. I have had numerous experiences with mortgage brokers, but none as good as you.

Duncan H

West Kingsdown
Kerry and Dawn were absolutely brilliant from start to finish for our first Time buy recently. As newbies we had a lot of questions which were responded to very quickly and clearly. Service was outstanding and I can't reccomend enough. Thank you!

Bec

I have enjoyed the benefits of extending my property portfolio with the advice from Norman Phillips and his team. I always trust their solutions and let them deliver the financial strategies needed.

Nicholas Thompson

Wimbledon
Thank you so very much for your help. We have finally completed on our purchase. At last we got there. Your assistance was invaluable.

Rob

Muswell Hill, London N10
Thank you so very much for your help. We have finally completed on our purchase. At last we got there. Your assistance was invaluable.

Rob

Muswell Hill, London N10
Kerry, Dawn and the rest of the team were brilliant. So responsive to communication and held our hand right the way through, even with post completion queries that as first buyers we had no clue about. Kerry was completely non-judgmental and just wanted the best for us. Would recommend Kerry and Drake Mortgages to anyone and we will be back for further help in future I'm sure!

Claire Saunders